DEATH OF OPEC!!!
 

<span style="font-size:18pt;line-height:100%">The death of OPEC</span>
Posted Sep 11 2008, 07:01 AM by Douglas McIntyre

Saudi Arabia walked out on OPEC yesterday, saying it would not honor the cartel's production cut. It was tired of rants from Hugo Chavez of Venezuela and the well-dressed oil minister from Iran.

As the world's largest crude exporter, the kingdom in the desert took its ball and went home.

As the Saudis left the building, the message was shockingly clear. “Saudi Arabia will meet the market’s demand,” a senior OPEC delegate told the New York Times. “We will see what the market requires and we will not leave a customer without oil."

OPEC will still have lavish meetings and a nifty headquarters in Vienna, Austria, but the Saudis have made certain the the organization has lost its teeth. Even though the cartel argued that the sudden drop in crude was due to "oversupply", OPEC's most powerful member knows that the drop may only be temporary. Cold weather later this year could put pressure on prices. So could a decision by Russia that it wants to "punish" the U.S. and European Union for a time. That political battle is only at its beginning.

The downward pressure on oil got a second hand. Brazil has confirmed another huge oil deposit to add to one it discovered off-shore earlier this year. The first field uncovered by Petrobras has the promise of being one of the largest in the world. The breadth of that deposit has now expanded.

OPEC needs the Saudis to have any credibility in terms of pricing, supply, and the ongoing success of its bully pulpit. By failing to keep its most critical member, it forfeits its leverage.

OPEC has made no announcement about any possibility of dissolving, but the process is already over.

Top Stocks blogger Douglas A. McIntyre is an editor at 24/7 Wall St.

Wow, very interesting development!

$5/gallon gas?

It pays to have a Little car

Gas should get cheaper than it would have been. Saudi has always supported selling oil for less than OPEC.

I am stoked!

Should get cheaper. Somehow I don't see this happening.

I meant cheaper than it would have gotten. OPEC wanted to cut production to raise the prices back to where they were before they dropped.

I don't understand how these executives are still alive. These are the people that deserve to get shot. Maybe after a few of them get the bullet the rest will get the hint and F*CK off with all of their speculations and billion dollar profits.

Yeah it's crazy. Saudi pulling out of OPEC is a step in the right direction though at least.